Shares of Nordstrom, Kohl’s, and J.C. Penney fell in premarket trading on Wednesday after Macy’s lowered its profit outlook in an earnings miss that was indicative of challenges within the broader department store and retail sector.
In its earnings report, Macy’s said excess inventory during the spring season forced the company to cut prices in order to move merchandise, which weighed on profits. The company is now expecting to earn between $2.85 and $3.05 a share this fiscal year, down from a range of $3.05 to $3.25.
The industry as a whole has been under pressure, as annual sales at U.S department stores fell 20% from 2017 to 2018 and are on pace to drop even further this year, according to the U.S. Census Bureau.
More and more shoppers are steering clear of shopping malls and instead turning to online clothing platforms like Stitch Fix, Net-a-Porter and Gilt to shop. Department stores are also struggling as more of the brands that sell within their stores, like Nike and Coach, are investing in selling as much directly to consumers as they can.
Department store operators also continue to deal with the threat of additional tariffs on consumer goods, like apparel and footwear, going into effect later this year.
The headwinds have been clear: luxury chain Barneys New York filed for bankruptcy, while Penney announced it was working with restructuring advisors to lessen its debt.
–CNBC’s Lauren Thomas contributed to this report.